Gasum Group Financial Statements Review 1.1.–31.12.2013

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013

This financial statements review is unaudited.

Cleanly with natural energy gases

USE

TRANSMISSION AND DISTRIBUTION

LNG

PRODUCTION, SOURCING AND SALES CHALLENGING YEAR FOR THE NATURAL GAS MARKET

KEY DATA FOR 2013 KEY FIGURES • Revenue totalled €1,147.5 million (2012: €1,281.8 million). ¤ million / % 2013 2012 CHANGE • Operating profit was €36.8 million or 3.2% of the reve- REVENUE 1,147.5 1,281.8 –10% nue total (€62.1 million or 4.8% of the revenue total). • Natural gas sales decreased by 5% on the year earlier OPERATING PROFIT 36.8 62.1 –40% and totalled 33.2 TWh in 2013. % OF REVENUE 3.2 4.8 • The Board proposes a dividend of €0.338 per share. PROFIT FOR THE FINANCIAL YEAR 33.5 42.6 –23%

CASH INFLOW FROM OPERATING ACTIVITIES 87.0 9.7 GASUM’S OUTLOOK FOR 2014 Natural energy gas demand and volumes are anticipated to INVESTMENTS 21.4 20.5 5% remain at the 2013 level in 2014. SHAREHOLDERS’ EQUITY 401.6 406.6 Gasum's acquisition of Skangass will result in a considerable increase in Gasum’s LNG business from 2013. NET INTEREST-BEARING DEBT 158.9 184.5

Gasum will continue the development of the Finnish RETURN ON EQUITY (ROE) 8.3% 10.6% energy infrastructure by investing in the LNG market, biogas business and transport services. EQUITY RATIO 52.3% 48.6%

NET GEARING 39.6% 45.4%

CEO JOHANNA LAMMINEN: “The volumes of natural energy gas consumption dropped slightly in 2013. This was due to the low prices of coal and emission allowances in particular. This is why there was also a decrease in the Gasum Group’s revenue and profitability from the year before. Neverthe- less, we have great confidence in the position of gas in the market, with liquefied natural gas (LNG) in particular offering an excellent opportunity for emission cuts on land and at sea. Gasum’s strategic goal is the speedy and successful development of the LNG market in particular, and the acceleration of the company’s growth through LNG. In line with this, we announced in early 2014 that Gasum will acquire the majority of the LNG distribution business of the Norwegian company Skangass from the Lyse Corporation. Skangass terminals and tankers will contribute towards improved supply security in Gasum’s LNG offering and enable the fast development of gas infrastructure in the northern Baltic Sea region.”

GASUM GROUP GASUM IN BRIEF Group Communications Gasum is a Finnish expert in natural energy gases. We import natural gas to Finland and transmit and supply it for energy production, industry, homes and transport. Gasum is an active developer of the Finnish FOR FURTHER biogas sector. Natural gas and biogas are natural energy gases that provide the Finnish energy sector with INFORMATION CONTACT: considerable advantages as they are efficient, environmentally friendly and local. Gasum is the leading Johanna Lamminen supplier of biogas in Finland. In 2013 a total of 33.2 TWh of natural gas was imported to Finland (34.9 TWh Chief Executive Officer in 2012, which corresponded to 8.5% of Finland’s overall energy need). Gasum launched several studies Phone: +35820 44 78602 concerning the development of biogas production and the utilisation of liquefied natural gas (LNG) as a marine fuel in Baltic Sea shipping. Gasum acquired the majority of the LNG distribution business of the DISTRIBUTION: Norwegian company Skangass in February 2014. STT, main media outlets www.gasum.com www.gasum.com

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013 OPERATING ENVIRONMENT or Pay obligation related to the gas supply contract. By its Finland’s economic situation remained unsettled throughout nature this is an advance payment for future natural gas use. 2013, and this was also reflected in the energy market. Energy Gasum has a long-term right to utilise this advance payment. consumption was also affected by the exceptionally warm Interest-bearing debt totalled €164.4 million (€197.3 weather. According to statistics produced by Finnish Energy million), of which €93.3 million were long-term (€140.1 Industries, industrial electricity consumption increased by million) and €71.5 million short-term (€57.2 million). approximately 1%, but in other sectors consumption was The Group’s cash flow from operating activities was €87.0 reduced by 3.5%, mainly due to warm weather. million after interest and dividends. In 2013 the sales of natural gas decreased by 5% on the The Group’s liquid assets at 31 December 2013 totalled year earlier and totalled 33.2 TWh (2012: 34.9 TWh). In €5.5 million (€12.9 million). addition to weather conditions, sales were also affected by the poor price competitiveness of natural gas. Although INVESTMENTS the price of natural gas showed a slight downward trend The Gasum Group’s investments in 2013 totalled €21.4 throughout 2013, the low price levels prevailing in emissions million (€20.5 million) and were primarily targeted at gas trading and the electricity market adversely affected the price transmission network development and maintenance and competitiveness of natural gas, particularly against coal. the development of new business activities. The Group’s The market situation was partly influenced by the Finn- depreciation totalled €29.6 million (€30.4 million). ish energy tax reform that took place in 2011 and involved a decision to raise natural gas taxation in three stages. The BUSINESS DEVELOPMENT IN 2013 second increase entered into force at the beginning of 2013. Energy Trade and Energy Services accounted for 80% (79%) In conjunction with Finland’s 2013 state budget an amend- and Transmission Services for 20% (21%) of the Group’s net ment to energy taxation was adopted, resulting in a shift in sales in 2013. heating fuel taxation based on energy content and carbon dioxide emissions towards a carbon dioxide tax. Finland's National Energy and Climate Strategy was Energy Trade updated by the Government in March 2013. Natural gas The Gasum Group’s Energy Trade business still plays a clear role in Finland’s energy production in area comprises wholesale trade in natural the new strategy, which sets the target of replacing 10% of gas, biogas business and LNG business. the current use of natural gas by wood-based biogas. The diversification of natural gas sourcing and the creation of a pipeline connection for Finland to trans-European energy networks via the Baltics are also regarded as a key goal. Energy Trade is the most important business sector for the Finland and Estonia are both interested in constructing Gasum Group's revenue, and in 2013 its revenue totalled an LNG terminal, but EU financial support will only be €899 million (€1,019 million). provided to one regional project. Finland and Estonia were Operating profit from wholesale trade in natural gas does unable to reach an agreement concerning the location of the not depend merely on developments in natural gas sales terminal in 2013. volumes. Instead, it is also affected by the trade structure and the price balance between natural gas acquisition and REVENUE AND FINANCIAL DEVELOPMENT sales. The reasonableness of natural gas wholesale pricing is The Gasum Group’s revenue for 1 January to 31 December supervised by the Energy Authority. To support wholesale 2013 decreased by 10% and totalled €1,147.5 million trade in natural gas, Gasum has developed short-term prod- (€1,281.8 million in 2012). The decrease in revenue was due ucts for increased flexibility in trading as well as services for to reduced natural gas sales volumes. In addition to weather natural gas price risk management. conditions, sales were also affected by the poor price The biogas and LNG business areas will enable the competitiveness of natural gas. diversification of sourcing in the future. New gas products Operating profit totalled €36.8 million or 3.2% of the are the most important issues enabling growth for the Group. revenue total (€62.1 million or 4.8% of the revenue total). In its liquefied form, natural gas can be delivered outside The Group's net financial expenses in 2013 amounted to the pipeline network, which provides potential access to €5.7 million (€5.5 million). entirely new customer groups. These include customers in The Group's taxes totalled €+2.5 million in 2013 the fields of shipping, land transport and industry. With the (€–14.0 million). regulations on Baltic Sea shipping emissions getting stricter, Profit for the period was €33.5 million (€42.6 million). the need for marine LNG is estimated to total at least 1.2 million tonnes (25 TWh). BALANCE SHEET, FINANCING AND CASH FLOW The Group's balance sheet total at 31 December 2013 was WHOLESALE TRADE IN ENERGY €768.6 million (€836.2 million). During the year under Wholesale trade in natural gas was clearly below the 2012 review the Gasum Group's return on equity was 8.3% level and the longer-term average. The low price levels (10.6%). and its equity ratio 52.3% (48.6%). of electricity and emission allowances resulted in a clear Reported under assets in the Group’s balance sheet is decrease in the utilisation rates of combined heat and power an advance payment of €82.7 million to Gazprom Export production (CHP) plants from the year before. For a long for failing to take the minimum contracted annual quantity time natural gas was the most important district heat fuel, in previous years (2009–2011) as required under the Take but in 2013 it was taken over by wood. In 2013 natural gas

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013 accounted for 26% and wood and other biofuels for 29% of wastewater treatment plant of the Helsinki Region Environ- the district heat fuels total. The share of coal among district mental Services Authority (HSY) since late 2012. heat fuels was 26% (24.5%). The construction of Finland’s largest biogas production The pricing of the energy sales of natural gas is based on and upgrading facility – owned by Gasum and LABIO the natural gas supply contract between Gasum and Russian (formerly called Kujalan Komposti) – began in Lahti in Gazprom’s subsidiary Gazprom Export. The current supply spring 2013. The facility will produce biogas from waste contract, valid until the end of 2026, is based on the special generated in the Päijät-Häme region. The facility is estimated structure of Finland’s natural gas market, which is reflected to be ready for biogas production in July 2014. in the fact that the price of natural gas follows not just In 2013 biogas was offered by Gasum for transport use, changes in oil prices but also fluctuations in the price of coal but the further improvements in supply resulted in explora- and domestic market energy prices. tions of interest in the utilisation of biogas among other The price of natural gas showed a slight downward trend customer groups as well. throughout 2013, with the year-on-year drop compared with 2012 averaging 8%. Energy Services ENERGY TRADE SERVICES The Gasum Group’s Energy Services The sales of Gasum’s energy trade hedging products fell business area covers distribution transmis- in 2013 due to the decrease in the wholesale figures. The sion, solution and distribution gas sales, volumes seen in 2014, however, are at the same level as heat services and transport services. in 2013. Hedging in electricity and emissions trading was still not attractive among natural gas customers due to the unfavourable price relationships. The sales of the Gasum In Finland a total of 7km of new pipeline sections were Plussa product were 4% of the total sales of natural gas, constructed for the Gasum Paikallisjakelu Oy distribution which meant a proportional increase on the year before network in 2013, with the network length now totalling (2%). The share of the secondary market was 1.9%. The 563km. In Estonia Gasum Eesti has a total of 62km of report service facilitating price development forecasting distribution network in Tabasalu and Rapla. The sales of provided by Gasum Energy Trade Services is used by almost retailed natural gas by Gasum Energiapalvelut Oy totalled half of the natural gas customers. 50.7 million m3 in 2013. The most important growth area for Gasum’s distribution LNG SALES AND DEVELOPMENT PROJECTS sales is the Nummela area of Vihti. Sales in other areas Gasum’s liquefied natural gas (LNG) sales amounted to turned out challenging as customers postponed investments 1,422 tonnes. The main customer was the Wärtsilä Vaasa due to the recession and the poor price competitiveness of production facility, which uses LNG in engine test runs. gas. Customer losses were seen in the Kymenlaakso region LNG is produced at Gasum's Porvoo liquefaction facility and in particular. delivered to customers by truck. Operating in Estonia, the sales and net sales of Gasum Gasum invested strongly in the development of the LNG Eesti AS increased, with the company’s natural gas sales business in 2013. A development company called Manga totalling 3.1 million m3. Distribution transmission services LNG was established by Outokumpu, Ruukki Metals, were also sold by the company to other retailers, and the Gasum and EPV Energy in December. The company aims to transmission sales totalled 9.3 million m3. construct an LNG import terminal in Röyttää, Tornio, and In transport the focus remained on marketing biogas create an efficient logistics chain around it. The company as a gas vehicle fuel. The number of transport customers will apply for investment aid from the Ministry of Employ- increased by 27% in 2013. The sales of natural energy gases ment and the Economy in early 2014. at Gasum’s public filling stations increased by 22% on the Gasum has selected Tahkoluoto, Pori, as the construc- year before, and biogas accounted for around 30% of the tion site for the first LNG terminal. According to Gasum's annual sales of Gasum's public filling stations. plans, the terminal will supply fuel particularly to Baltic Local buses serving urban areas form an important Sea shipping and industrial facilities in the local area. The transport customer segment, with other customers including terminal investment will total around €60 million. Gasum delivery and waste management vehicles, taxis, forklift estimates that construction in Pori will begin in 2014 and trucks and a steadily growing number of private motorists. be completed in 2016. The construction project is estimated Two new Gasum filling stations were opened in 2013, to provide 250 full-time equivalents of employment. Gasum one in Tytyri, Lohja, and the other in Hermanni, Helsinki. is also ready to invest in Turku at a later date following a Gasum anticipates excellent transport fuel growth potential positive permit decision and market development. for biogas as a renewable local energy source. In Helsinki Metropolitan Area public transport the share of gas has BIOGAS AND RENEWABLES become smaller. Efforts have, however, been made to take Gasum’s biogas supply improved considerably in 2013. the considerable environmental benefits that can be obtained A total of 31,721 MWh of biogas was injected into the trans- with biogas into consideration in contexts such as the mission network in 2013 – an amount almost seven times Helsinki Region Transport's (HSL) competitive tendering that injected in the year before (4,513 MWh). This added concerning public transport services. production was generated at the biogas production facility that has been operating in conjunction with the Suomenoja

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013 Transmission Services and Amber Grid (Lithuania) teamed up to commission a The Gasum Group’s Transmission Services study from the Latvian consulting company Olimps on the covers Gasum Corporation’s wholesale gas countries’ shared gas infrastructure development needs and transmission services. Gasum is the Finnish supply security. Issues examined in the study included the transmission network operator under the region’s LNG terminal projects, the utilisation of the Latvian Natural Gas Market Act and obliged to gas storage facilities and development needs relating to the maintain and develop the network. countries' pipeline networks. Findings made by the study include the LNG terminal under construction in Klaipeda, Revenue in 2013 totalled €227 million (€240 million). Lithuania, not being able to serve the Finnish and Estonian The bulk of the Gasum Group's balance sheet consists of needs under the current infrastructure setup. The utilisation the natural gas transmission network. Transmission network of the Inčukalns gas storage facilities by Finland requires maintenance and development also play a key role in the the strengthening of the pipeline as well as compressor Gasum strategy, including as a distribution channel for new, infrastructure. It was also found by the study that the bio-based energy gases. Gasum's activities are supervised by placement of the regional LNG terminal in Finland instead the Energy Authority, which has appointed Gasum as the of Estonia would have benefits from the viewpoint of issues natural gas transmission system operator (TSO) in Finland. such as supply security and investment costs. The Energy Authority approves the terms and conditions imposed by Gasum to implement system responsibility. FINNGULF LNG AND BALTICCONNECTOR It also supervises the reasonableness of Gasum's trans- Gasum’s transmission system operator (TSO) role also mission pricing, the operative costs that can be affected entails Gasum’s obligation to develop the gas system. In line and the quality level of natural gas supply. The majority with the Finnish Government's policy, Gasum is exploring of fixed costs consist of maintenance costs. The regulation the opportunity to develop the transmission network by used to take place over periods of four years. A decision constructing an LNG terminal in Finland as part of the was, however, made by the Energy Authority to extend Finngulf LNG project. The Balticconnector project is looking the period that commenced in 2010 by two years until the into the opportunity to connect the Finnish and Estonian end of 2016. The decision was based on the Authority’s gas networks with a pipeline laid under the Gulf of Finland. wish to harmonise the regulatory periods of electricity A Memorandum of Understanding (MoU) was signed in network and natural gas network operations. The change early 2013 by Gasum and the Estonian TSO EG Võrguteenus was implemented under the 2013 reform of the Natural Gas concerning their joint development of the Balticconnector Market Act. project. The 2013 revenue of Gasum’s Transmission Services was The Finngulf LNG and Balticconnector projects are below the maximum permitted level. The cost efficiency included in the Projects of Common Interest (PCI) list and supply security targets set for wholesale transmission published by the European Commission in October 2013 were reached in 2013. The rate of return on transmission and therefore eligible to apply for EU financial support and services was below the permitted annual level, and the covered by the accelerated permit granting procedure. cumulative return below the permitted level for the latest As regards the Finngulf LNG project, the environmental period is almost €100 million. Regardless of the rate of impact assessment (EIA) procedure launched by Gasum return being below the permitted level, Gasum has not in- in April 2012 was completed in autumn 2013. The EIA creased the transmission tariff in order to avoid a reduction covered the potential construction of the terminal in two in the competitiveness of gas. The supply security target has locations, Ingå and Porvoo, with three different size options been reached every year, but the cost efficiency target was considered for the terminal. Both locations were found to be exceeded in the two previous years, which has contributed possible as regards the environmental perspective. The EIA to a reduction in the permitted rate of return. on the Balticconnector gas pipeline was launched in late The security of natural gas supply remained at a good 2013. level in 2013. The amount of energy not delivered accounted for 0.00265% of the total energy volume transmit- GAS EXCHANGE LTD ted via the network. There were three planned network Gasum subsidiary Gas Exchange Ltd operates an online service interruptions and another three interruptions marketplace for secondary market trading in natural gas and caused by disturbances. for Gasum’s short-term products. Trading on the Finnish Gas The total length of the natural gas transmission network Exchange totalled 2,035 GWh, down 23% on the year before was 1,286km at the end of 2013. The calculated network (2,636 GWh). The volume corresponded to 6.1% of total capacity was 9,250 MW in 2013. No new pipeline sections natural gas consumption, while the figure a year earlier had were connected to the network in 2013, but a 32-km parallel been 7.5%. The number of transactions was up 21% on the section in Kotka was taken out of active use. year before. The renewal of the network control system was launched In the gas sector, marketplaces such as the Gas Exchange by Gasum in 2013. The current transmission network operate under gas transmission activities in order to separate control system has been in operation since 1999. The new the marketplaces from the sellers and buyers of gas and to system will help Gasum respond to transmission service place them under the control of a party that is independent needs and changes in the operating environment over the of these. In addition to gas trading, these marketplaces are next 15 years. The system will be introduced in late 2014. usually also used as transmission network capacity market- Gasum and the Baltic transmission system operators places and as transmission network operator tools for the (TSOs) EG Võrguteenus (Estonia), Latvijas Gaze (Latvia) buying and selling of gas needed for network balancing.

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013 Experiences gained from the operations of the Finnish technologies. Carbon dioxide emissions are minimised by Gas Exchange and the technical applications developed using less fuel gases at compressor stations. Environmental for it were utilised in the launch of gas exchange trading effects of construction are reduced through approaches in the Baltics. GET Baltic, the company responsible for the including new construction technologies and in-depth operations of the Lithuanian gas marketplace, began trading preliminary assessments of environmental impacts. in January 2013. The annual trading volume of the GET Gasum got close to its occupational safety target set for Baltic gas exchange totalled 536 GWh, corresponding to 2% 2013. One of the personnel-wide performance targets was to of the total consumption of gas in Lithuania. The company make safety observations and enter them into the monitoring is owned by Gasum (34%) and Lietuvos Dujos (66%). One system. The minimum objective was for every staff member of the objectives set for 2013 was to also establish a gas ex- to make at least three observations. The objective was change company in Estonia, but the project was postponed. reached well, and the number of observations increased six-fold from the year earlier. STRATEGY AND STRATEGIC PROJECTS Gasum is a signatory to the Finnish industrial energy In line with its strategy, Gasum will continue to develop the efficiency agreement and a member of the Zero Accident gas market and a business portfolio based on natural energy Forum, which comes under the national industrial ac- gases. The company aims to diversify the use and sourcing cident programme, and the Chemical Industry of Finland's of natural gas and be the leading biogas market operator Responsible Care Initiative. Gasum has also made a in Finland. Gasum is also considering the expansion of its commitment to the Baltic Sea Action Group regarding the operating area in the Baltic Rim. The company will invest development of capacities to use LNG as a shipping fuel. strongly in new products, such as liquefied natural gas Gasum is also a member of the Climate Partners network of (LNG) and land and maritime transport fuels, as well as in the City of Helsinki and local businesses. Gasum’s Climate new technologies, such as wood-based biogas (bio-SNG, Commitments include using biogas to fuel the company cars synthetic natural gas). and service vehicles in the Helsinki region. Gasum’s strategic goal is to achieve the speedy and successful development of the LNG market in particular. In DEVELOPMENT PROJECTS addition to building the required infrastructure, this will In 2013 Gasum continued explorations into the construc- also require integration with other parts of the LNG value tion of the LNG supply and logistics chain and the further chain, such as production and imports. As well as Finland, specification of customer potential. Gasum is making Gasum regards the entire northern Baltic Sea region as the investments for the development of the Finnish gas infra- foundation for its business development. structure in Gasum’s key growth areas and developing the Gasum announced in early 2014 that it will acquire the Finnish energy infrastructure with environmentally friendly majority (51%) of the LNG distribution business of the solutions. Norwegian company Skangass from the Lyse Corporation. Biogas is an important business area for Gasum's future. The acquisition is part of Gasum’s strategy of improving Gasum, Helsingin Energia and Metsä Fibre, a Metsä Group access to competitive LNG in Finland. company, are conducting a joint feasibility study on the Skangass terminals and tankers will contribute towards construction of a biorefinery for biogas production in Jou- improved supply security in Gasum’s LNG offering and tseno. If realised, the biorefinery will produce biogas from enable the fast development of gas infrastructure in the renewable wood raw material for transmission to customers northern Baltic Sea region. Larger combined import volumes along the gas network. The project’s Environmental Impact will result in more efficient sourcing and also make it more Assessment (EIA) was completed in August 2013. The viable to open new LNG terminals. The acquisition will EIA procedure and the more in-depth technology reviews unify the Finnish, Norwegian and Swedish markets geo- confirm that the project is feasible as regards its environ- graphically, enabling the delivery of a competitive product mental impacts and technology aspects. In the prevailing throughout the region. It will also improve the operational emissions trading and electricity market situation, however, development of procurement and distribution services and wood-based biogas produced in Finland is not able to efficiency in the logistics chain and chartering as well as compete with other fuels. The implementation of the project increasing overall storage capacity. would only be possible with sufficient national support. No further decisions have been made concerning the promotion THE ENVIRONMENT AND SAFETY of the project. Gasum’s integrated management system comprises quality, In January 2014 a strategically important Enterprise environmental and safety management systems and is certi- Resource Planning (ERP) system was taken into use by fied in accordance with the ISO 9001:2008, ISO 14001: 2004 Gasum, which resulted in a major reform of many issues, and OHSAS 18001:2007 standards. System conformity is such as financial processes. The project aims to provide monitored annually through internal audits as well as audits business support throughout the Gasum Group, including conducted by an external organisation. improved efficient approach, internal efficiency, resource The most significant environmental impacts of Gasum's management and reporting. operations result from the use of compressors and the construction of pipelines. Some of the compressor stations RESEARCH required in natural gas transmission come under emissions The winners of the Gasum innovation competition launched trading. in October 2012 were announced in June 2013. The aim was Nitrogen oxide emissions are reduced by selecting those to find and promote new natural energy gas solutions for a compressor units that utilise low-emissions combustion sustainable tomorrow through the facilitation of the creation

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013 of new technologies, business activities and enterprises by The acquisition of the Series K share by way of a transfer players in the gas sector. The winning entry was an innova- requires the consent of Gasum Corporation’s Board of Direc- tion by the Gasvuala team providing a module solution for tors. If this consent is not forthcoming, the holder of the K the fuel conversion of ships to LNG. Prizes were also given share has the right to demand that the share be converted to to the idea of utilising natural energy gases to charge electric an A share. cars and another team’s idea of improving energy efficiency in greenhouse cultivation with natural energy gases. A total CORPORATE GOVERNANCE of €100,000 was given out in prizes. In 2013 the Gasum Group organisation consisted of three Six grants were issued in 2013 from the Gasum Gas Fund business areas and three Group functions. A new organisa- administered by the Finnish Foundation for Technology tion structure under which Gasum's business activities are Promotion, amounting to a total of €46,500. To increase divided into four business areas and six Group functions interest in gas-related research, Gasum and the Foundation was announced in January 2014. organised a current issues seminar on the gas sector aimed at In accordance with the Finnish Limited Liability students and researchers in December. Companies Act, those responsible for Group administration Gasum is a shareholder of CLEEN Ltd, a Strategic and operations are Gasum Corporation’s general meeting of Centre for Science, Technology and Innovation that aims to shareholders, Board of Directors and CEO. The general meet- organise strategic research collaboration between enterprises ing of shareholders also selects Gasum's Supervisory Board. operating in the energy and environmental sectors as well as The Supervisory Board is responsible for ensuring that the the funding required for this. Participation in its operations company is run in line with the decisions and instructions promotes the implementation of Gasum's own technology of the general meeting of shareholders and sound business projects. principles. The Supervisory Board makes decisions on major strategic policies regarding Gasum Corporation and also PERSONNEL selects Gasum Corporation’s Board of Directors. New ventures and major investment projects resulted in an The Board of Directors comprises the chairperson and increase in the number of Gasum employees in 2013, and a maximum of six ordinary members. The Board of Direc- the Gasum Group had an average of 273 employees in 2013 tors is responsible for the company’s administration and (259 in 2012). The average number of Gasum Corporation operations in compliance with legislation, the Articles of employees was 120. Of the largest subsidiaries in terms Association and the instructions issued by the Supervisory of personnel, Gasum Tekniikka Oy had 125 and Gasum Board and for decisions on issues such as the conveyance Energiapalvelut Oy 20 employees. and mortgaging of fixed assets and the hiring and dismissal of senior managers not appointed by the Supervisory Board. OWNERSHIP STRUCTURE AND SHARES The CEO is assisted in the steering of the Group's opera- There were no changes among Gasum shareholders in 2013 tions by the Management Team. despite the October 2012 announcement of E.ON Ruhrgas Gasum’s Annual General Meeting (AGM) was held International GmbH of its plans to give up its shareholding on 22 May 2013. The shareholders adopted the financial in Gasum. statements for 2012, approved the payment of dividend recommended by the Board of Directors and the bonuses to be paid to employees and released the members of the GASUM IS OWNED BY: Supervisory Board, the Board of Directors and the CEO from liability for the 2012 financial year. FORTUM HEAT AND GAS OY 31% Members of the Supervisory Board were also confirmed OAO GAZPROM 25% by the AGM. Jorma Eloranta was reappointed as Chair- man, Jarmo Väisänen as Vice Chairman and Seppo Aho, FINNISH STATE 24% Timo Karttinen, Pavel Oderov and Matthias Kohlenbach E.ON RUHRGAS INTERNATIONAL GMBH 20% as members. Rainer Link and Igor Lipskiy started as new members of the Supervisory Board. Appointed by the AGM, authorised public accountants The company's share capital is divided into Series A and PricewaterhouseCoopers Oy acted as the Gasum Group’s Series K shares. There are 53,000,000 Series A shares and 1 auditors, with Pasi Karppinen APA as the principal auditor. Series K share. The Series K share is owned by the Finnish CEO Antero Jännes served as Chairman of Gasum Corpo- State. ration’s Board of Directors. Björn Ahlnäs served as Deputy Each share entitles its owner to one vote when voting in Chairman and Board member until 1 May 2013, which is shareholders' meetings. The rendering of decisions in share- when Board member Christer Paltschik was appointed as holders' meetings regarding amendments to the company's Deputy Chairman, while the other Board members were Articles of Association, and the selection of the Supervisory Aleksei Novitsky, Ari Suomilammi and Kristiina Vuori. Board's Chairperson, Deputy Chairperson and Members In September 2013 Johanna Lamminen was appointed as as well as their discharge of responsibilities requires, in Board member. She joined Gasum in September 2013 as addition to the majority required under the Limited Liability Executive Vice President and began as CEO on 1 March 2013 Companies Act, also a corresponding majority of the votes and Chairperson of the Board of Directors in March 2014 given by the A shares as well as the votes given by the K following the retirement of Antero Jännes. share. All Series A shares and the Series K share have the During the year under review, the Supervisory Board met same right to dividends and the company’s assets. three times and the Board of Directors 14 times.

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013 In accordance with the instructions issued by the Govern- EVENTS AFTER THE YEAR UNDER REVIEW ment's Ownership Steering Department, Gasum has drawn A new organisation structure was announced in January up guidelines specifying the principles of good governance 2014 under which Gasum's business activities are divided and ethical practice to be applied within the company. into four business areas – Energy Trade, Energy Trade LNG, A summary of the guidelines in Finnish can be found on Energy Services, and Transmission Services – and into six Gasum's website. Group functions – 1) Maintenance and Installation Services, In 2013 the Gasum Group operated performance and 2) Legal Matters, Regulation and HR, 3) Project Services, 4) profit bonus schemes, and a long-term reward system was Strategy and Corporate Responsibility, 5) Finance, and 6) applied to Group key persons. These are in accordance Corporate Relations, Communications and Marketing. with the guidelines issued concerning the state’s associated In February Gasum announced that it will acquire the companies. The maximum reward for senior executives majority (51%) of the LNG distribution business of the is 50% of annual salary. Gasum has obtained consultancy Norwegian company Skangass from the Lyse Corporation. services regarding the design of management reward systems The acquisition is part of Gasum’s strategy of improving from PCA Corporation Finance, with Tapio Tolvanen acting access to competitive liquefied natural gas (LNG) in Finland. as the head consultant. SHORT-TERM OUTLOOK RISKS AND RISK MANAGEMENT Market development Gasum's business risks include those related to the energy A major market is being created for liquefied natural gas (LNG) market and fuel price development as well as those related in the Nordic countries. The new sulphur dioxide emission to access to natural gas, the functioning of the transmis- limits that will enter into force in 2015 will increase the need sion system, business regulation, safety and security, and for cleaner shipping fuels. In addition to maritime transport, environmental impacts. The most considerable risks from improved access to LNG will also serve the growing needs of the profit perspective are to do with fuel price development heavy-duty transport and industrial facilities located beyond and business regulation. the natural gas network catchment area. The demand for There are also considerable risks involved in the new cleaner fuels will also be increased by the stricter environmen- business activities created by Gasum. The energy sector is tal regulations applied to the industry in the coming years. characterised by large initial investments, the profitability of which is difficult to predict specifically before the opera- Gasum's outlook for 2014 tions are launched and have become established. Natural energy gas demand and volumes are anticipated to Gasum is prepared for natural gas supply disruptions remain at the 2013 level in 2014. with reserve fuel arrangements. The functioning of the Gasum's acquisition of Skangass will result in a consider- transmission system is monitored and improved through able increase in Gasum’s LNG business from 2013. network renewal and new construction in accordance with Gasum will continue the development of the Finnish a long-term plan. Gasum has been developing fuel, particu- energy infrastructure by investing in the LNG market, biogas larly oil, price risk management for several years. Efforts business and transport services. are made to manage risks relating to new business activities through measures including the utilisation of international PROPOSAL FOR THE DISTRIBUTION OF PROFIT references as background data and minimising any risks Gasum Corporation’s distributable assets total relating to financing. €45,001,871.24, of which the profit for the financial year is Natural gas network operations and energy trade are both €17,951,407.56. supervised by the Energy Authority. Changes in Finnish Regarding the use of distributable assets, the Board of or European regulation may result in adverse effects on Directors recommend that a dividend of €0.338 per share, in Gasum’s financial position or opportunities to pursue objec- other words a total of €17,376,580.34, be paid and that the tives set for the development of the natural gas market. remaining shareholder’s equity of €27,087,870.90 be retained.

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013 This financial statements review is unaudited.

INCOME STATEMENT

¤ million / % 1.1.–31.12.2013 1.1.–31.12.2012 Revenue 1,147.5 1,281.8 Other operating income 0.5 0.7 Materials and services –1,040.4 –1,149.6 Staff costs –22.7 –21.4 Depreciation and value adjustments –29.6 –30.4 Other operating expenses –18.5 –19.0

Operating profit 36.8 62.1 as % of revenue 3.2% 4.8% Profit before appropriations and taxes 31.1 56.6

BALANCE SHEET

¤ million / % 31.12.2013 31.12.2012 Balance sheet total 768.6 836.2

Fixed assets 537.6 546.2 Intangible rights and assets 9.9 9.8 Tangible assets 525.1 533.9 Financial assets 2.6 2.5

Current assets 230.9 290.0 Inventories 92.0 92.4 Receivables 133.5 184.7 Cash and cash equivalents 5.4 12.9

Shareholders' equity 401.6 406.6 Share capital 178.3 178.3 Other equity 223.3 228.3

Debt 366.9 429.6 Long-term 93.0 141.7 Short-term 228.7 234.3

FINANCIAL RATIOS AND OTHER DATA

¤ million / % 2013 2012 Quick ratio 0.6 1.0 Equity ratio 52.3 48.6 Net gearing (%) 39.6 45.4

Return on equity (ROE) (%) 8.3 10.6 RONA (%) 5.1 8.9

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013 Formulas forfor keythe financialkey financial indicators indicators

Operating profit Operating profit % = × 100 Revenue

Cash and receivables Quick ratio (QR) = × 100 (Short-term liabilities – advance payments)

(Profit for the year – taxes) Return on equity (ROE) % = × 100 (Total equity average)

(Shareholders’ equity + provisions) Equity ratio % = × 100 (Balance sheet total)

Interest-bearing net debt Gearing % = × 100 Total equity

Return on net assets (Profit before extraordinary items + interest payable and similar expenses – taxes) = × 100 (RONA) after taxes % Average capital employed

9 GASUM FINANCIAL STATEMENTS 2013

GASUM GROUP FINANCIAL STATEMENTS REVIEW 1.1.–31.12.2013 GASUM GROUP Miestentie 1, P.O. Box 21 FIN-02150 Espoo, Finland Phone: +358 20 4471 www.gasum.com